We’re Number Two!How Trump ceded the future to China
Paul Krugman
Nov 03, 2025
*Excluding Canada and Mexico
Source: Yale Budget Lab
Does Donald Trump realize that he has ceded world leadership to China? Probably not: During his recent Asian trip, foreign leaders flattered him and showered him with personal gifts, so he came home with his ego even more inflated than usual. Nobody close to him would dare tell him that if you look at the substance of what he agreed to, it amounted to an ignominious retreat. When Chuck Schumer pointed out the reality of what Trump didn’t accomplish, his reaction was hysterical:
Well, if this be treason, make the most of it. The whole world knows what Trump’s sycophants won’t tell him: His confrontation with China has ended up demonstrating Chinese strength and American weakness.
Now, I am not a mercantilist. Trump may imagine that the world economy is a zero-sum game, where one nation’s gain is another nation’s loss. But it isn’t. China’s astonishing rise since the economic reforms of Deng Xiaoping hasn’t made America poorer. If anything, the rapid ascent of a nation of 1.4 billion people from desperate poverty to middle-income status (per capita, China still lags America and Europe) has made us richer, expanding world markets and providing us with manufactured goods that would be far more expensive to produce at home.
But China’s rise has created geopolitical problems. As recently as the 1980s all of the world’s largest economies were democracies, allied to the United States both by formal treaties and by shared political values. Democracies as a group still dominated the world economy in the early years of the 21st century. But now China’s economy, measured by the real quantity of goods and services it produces, is bigger than America’s and much bigger than any other nation’s:
Source: International Monetary Fund
In addition to being huge, China’s economy is in some ways more advanced than you might expect given that it is still only a middle-income nation. As I explained yesterday, China dominates renewable energy, one of the most important technologies of the 21st century, and it is giving America serious competition in information technology too.
Why is any of this a problem? China isn’t evil, and while I love my country I don’t believe that America and its allies have any inherent right to rule the world. But by historical standards America was a relatively benign hegemon, largely because we were more than a nation: we were an idea. And the Pax Americana, for all its many....
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